Shearman & Sterling LLP | FinReg | UK Allows Post-Brexit Endorsement of Credit Ratings From the EU
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  • UK Allows Post-Brexit Endorsement of Credit Ratings From the EU

    The U.K. Financial Conduct Authority has published a statement confirming that the EU regime for credit rating agencies is "at least as stringent" as the U.K.'s regime, post-Brexit. The U.K. CRA Regulation provides that banks, investment firms, insurers, reinsurers, management companies, investment companies, alternative investment fund managers and CCPs may use credit ratings for certain regulatory purposes if a rating is issued by a third-country CRA under the endorsement regime. The FCA considers that the EU regime meets the conditions for endorsement. This will allow U.K.-registered CRAs to endorse credit ratings into the U.K. from EU affiliates for regulatory use under the U.K. CRA Regulation. The European Securities and Markets Authority has announced today that the U.K. regime has been positively assessed for endorsement under the EU CRA Regulation.

    In addition, in preparation for a no-deal Brexit, the U.K. is establishing (i) a conversion regime for U.K. and third-country CRAs currently registered or certified by ESMA; and (ii) a temporary registration regime for newly established U.K. entities that are part of a group of CRAs with an existing ESMA registration before exit day.

    View the FCA's statement on endorsement of EU credit ratings.

    View details of ESMA's statement on endorsement of U.K. credit ratings.

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